CINCINNATI (AP) — Regional bank Fifth Third Bancorp's first-quarter net income dipped 2 percent as it made less from deposits and loans as well as fees and other sources.
But the results beat analysts' expectations, and Fifth Third shares edged higher Thursday.
CEO Kevin Kabat said credit trends continued to be favorable, with net charge-offs declining 10 percent. He also pointed to strength in commercial and industrial lending and in residential mortgage loans.
The Cincinnati company said that it earned $413 million, or 46 cents per share, for the three months ended March 31, down from $421 million, or 45 cents per share, a year ago.
Analysts surveyed by FactSet, on average, expected earnings of 39 cents a share.
Earnings from deposits and loans, also known as net interest income, declined to $893 million from $903 million. Income from fees and other sources slipped to $743 million from $769 million.
But net charge-offs, or the amount of money lost on bad loans, fell to $133 million from $220 million — the lowest level since 2007.
Fifth Third shares closed Thursday trading up 12 cents, less than 1 percent, at $15.92. Shares have traded between $12.04 and $16.86 over the past 52 weeks.
"I would say this is a solid quarter for Fifth Third," said Matthew McCormick, banking analyst and portfolio manager for Bahl & Gaynor Investment Counsel in Cincinnati. "Their loans increased more than people expected, and their expenses were well in control."
While the economic environment remains challenging, McCormick says Fifth Third "seems to be navigating it easier than some of its competitors, and that's part of the reason you're seeing the stock price up."
He also noted that Fifth Third's loan growth was driven by commercial and industrial loans. Fifth Third has said that it expects loans to grow in the single digits this year.
Kabat told analysts in a conference call Thursday that the investments Fifth Third has made, particularly in the areas of energy, health care and manufacturing, as well as the consumer area, "are continuing to add to our focus on loan growth, so we feel good about the investments made."
The CEO also said the company has been able to gain more market share from the investments and focus on strategic businesses.
"We still feel good about our yearlong guidance," Kabat said.
Fifth Third also expects to see some "additional opportunity in commercial real estate," Kabat said.
Fifth Third has been rebounding from the effects of the hard-hit housing market during the recession, especially in Florida and Michigan. The bank also operates in Ohio, Kentucky, Indiana, Illinois, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina, with more than 1,300 banks.
Last month, Fifth Third declared a cash dividend on its common shares of 11 cents for the first quarter of 2013. Its dividend had been cut to 1 cent per share in late 2008.
Associated Press writer Dan Sewell in Cincinnati and AP Business Writer Michelle Chapman in New York contributed to this report.
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